After the Securities and Exchange Board of India’s recent norm on allowing mutual fund units to be transacted on stock exchanges through stock brokers, the National Stock Exchange of India became the first such exchange where investor can buy and sell mutual fund units. The NSE began mutual fund trading from November 30 onwards. UTI Mutual Fund became the first beneficiary and received 75 lakhs from 300 applications on day one. Few other mutual fund houses are also planning to join the NSE soon.
The Bombay Stock Exchange would also start trading in mutual funds from December 4 onwards. Currently, Tata Mutual Fund has tied up with the exchange.
The process for transacting in mutual funds through a stock broker via depository mode would be similar like stock trading. Investor needs to have a broking account with a stock broker as well as a demat account in case he chooses depository mode. However, you have a choice of opting for physical mode as well. Investor will have a choice of either accepting units in physical form or in demat form. Receiving units in demat form will result in less paper work, would facilitate in easy transactions and save time. Units bought prior to 3 pm would get the same day NAV, while the units bought after 3 pm, would be subject to the next day’s NAV. Investor would be able to view complete previous transaction history in one go too. Transactions would be settled on T + 1 day basis.
The step is to expand mutual fund reach, currently affected by the capital market regulator’s no entry load move. Investor can certainly take advantage of this new trading platform. The move will help in facilitating quick settlement of transactions for investors and will avoid filling up forms for purchases and redemptions.
For the time being, you can buy UTI Mutual Fund’s units on the NSE platform from your stock broker.
